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Wednesday, October 29, 2008

Hungary Terminates Bond Auctions For The Time Being

Hungary's Government Debt Management Agency (ÁKK) announced today (Wednesday) that it was cancelling the auction of 5-year bonds it had scheduled for 6 November 2008 and that no further government bond auctions will be held during this calendar year.

“In order to assuage or eliminate the imbalance experienced on the government securities market", the ÁKK said in its statement. “With these measures the ÁKK intends to tone down supply side pressure on the secondary market so as to further improve the efficiency of price quotations and achieve that trading activity returns to normal."

“This step is an integral part of the series of measures jointly taken by ÁKK, the National Bank of Hungary (NBH) and the primary dealers aiming at restoring the normal operation of the government securities market and thus supporting the consolidation of the Hungarian money and capital markets".

The AKK had already announced a marked reduction of HUF government securities issuance (on October 10), which had meant that the only auctions to be held during the remainder of 2008 would involve the refinancing of maturing debt.

Basically the Hungarian government are trying to avail themselves of the relative calm that may be enjoyed in the wake of the IMF/EU/ World Bank loan decision to put some order into what had become a very troubled environment. Should the government need additional finance it can now decide to use part of the loan and HGB issuance could be further reduced next year, as the need arises.

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